Senate debates

Thursday, 15 June 2017

Bills

Banking and Financial Services Commission of Inquiry Bill 2017; Second Reading

9:32 am

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

I open my comments with a reflection to all colleagues, following the statement that was just made by Senator Hinch, that there needs to be mutual respect across this chamber, all for each other. We can come in here with spirited and different views, but the simple fact of the matter is that, when mutual respect for colleagues is lost, this Senate, which is the senior chamber of the Australian parliament and the Australian people, is the poorer for it.

It is my pleasure to speak to the Banking and Financial Services Commission of Inquiry Bill 2017, which has been moved by several in this place. I want to make the point, firstly, about the work the government is doing, has done and will do into the future in relation to regulation and control of the banking sector to the extent that it is the role of the federal parliament to so do. Let me spell out, if I may, just a summary of the key contacts for people who believe they have a case against the banking sector—in other words, misconduct in the banking and financial services sector.

I refer firstly to the Australian Small Business and Family Enterprise Ombudsman. That particular person's role is to assist operators of small businesses, family enterprises, who may be in dispute with parties such as clients, other businesses or Commonwealth government agencies, and this includes banks. That provides tailored facilitating discussions between disputing parties.

The second is the financial ombudsman: a person who provides free, independent dispute resolution for consumers unable to resolve their complaints with a member of the financial services sector. Businesses with an Australian financial services licence must be a member of either the FOS, Financial Ombudsman Service, or the Credit and Investments Ombudsman agency for external dispute resolution purposes—a service which is available to small claimants particularly.

The third area where alleged misconduct by the banks can be brought to the fore is the Credit and Investments Ombudsman, which again provides free, independent dispute resolution for consumers unable to resolve their complaints with a member of the financial services sector. The fourth is the Superannuation Complaints Tribunal. I have certainly had constituents who have availed themselves of this service. Again, it provides free, independent dispute resolution for complainants who believe they have been unfairly dealt with by regulated superannuation funds, annuities, deferred annuities and retirement savings accounts.

Each of these is free and each of these is independent—I keep going. In this country we also have ASIC, the Australian Securities and Investments Commission, which regulates financial markets, including alleged illegal conduct by credit providers, by insolvency practitioners, through share market misconduct and by financial service providers. ASIC also examines and investigates scams involving financial products. It is a very powerful organisation that is well funded and increasingly well funded now by the federal government.

I now come to APRA, the Australian Prudential Regulatory Authority. Regulated institutions under APRA include, firstly, banks and, secondly, credit unions, building societies, general insurance and reinsurance companies, life insurance companies, the private health insurance sector, friendly societies and most if not all within the superannuation industry.

As a result of the allocation of funds in the 2017 budget—and I certainly hope the measures will be passed in this place in the next sitting period before the end of the financial year—a new unit within the ACCC is to be established to undertake regular inquiries into specific financial system competition issues. It is vitally important that we have a strong, robust and reputable banking system filled with integrity. It is equally important that all of Australia's consumers, where they believe they have a complaint as a result of misconduct of a person in the banking sector, have redress available to them without cost, where they can have their complaint heard, have it adjudicated and receive satisfaction.

I, like many others in this place, have received complaints from constituents. Senator Dastyari, who is sitting opposite, and I notice Senator Whish-Wilson is also in the chamber—we have participated in the managed investment scheme inquiries, and we have all heard about the most terrible activities undertaken by some in the banking sector and by those who supported them in what was a very, very poorly designed and implemented scheme, particularly as it related to aspects of agricultural and horticultural production. I, for one, am certainly of the view that we need strong regulation and strong oversight of the banking system. What this government has done and will be able to do in the future with the concurrence of those in this chamber across the divide is to continue to exercise strong control over the banking sector and particularly give complainants—especially those who would otherwise not have the financial wherewithal—the ability to register their complaints and have them heard and adjudicated.

Let me explore further, if I may, some of those measures. First of all there is the concept of a one-stop shop to be established 12 months from now, by 1 July 2018. I say 'by 1 July 2018', but I would hope that it will be legislated and in place before then. The Australian Financial Complaints Authority will be an industry-funded—not funded by the taxpayer—one-stop-shop dispute-resolution body that will provide free, fast and—listen to this—binding determination for consumers. This, of course, is as a result of recent work undertaken to investigate the banking system. It will be able to award fair compensation when it has determined that consumers have wrongfully suffered a loss as a result of the conduct of a financial services provider, and it will provide real and immediate outcomes for consumers. It was part of a recommendation of the recently completed Ramsay review. The Turnbull government, as we know, is focusing on delivering genuine outcomes for Australian consumers, and we want to try and remove the politics from this whole process so that we can get to the stage of doing what we need to do for Australian consumers, and that is to protect them.

The second element I am about to canvass to the chamber is long overdue: a banking executive accountability regime. This is an incredibly powerful tool. The government will introduce a new banking executive accountability regime, with enhanced powers for APRA, the Australian Prudential Regulatory Authority, to remove and to disqualify a banking executive, to direct adjustments to the bank's remunerations policies and to enforce new expectations on bank conducts, with penalties of up to $200 million where they are not met. It will be a requirement that senior bank executives will be registered with APRA, and the banks will be required to advise APRA prior to making a senior appointment.

There will be penalties imposed on banks that do not monitor the suitability of their executives to hold senior positions. Can you imagine what the career prospects would be for a banking executive who was found to be in default under these new guidelines? What chance would they have of a future career in the banking industry or related credit industries? The answer is nil. This is a powerful weapon to be able to ensure that bank executives meet the expectations of the community and, indeed, one would hope, to meet the expectations of their own vision and mission statements in terms of integrity and probity, not only for themselves but for those who are subordinate to them and who report to them. They will have nowhere to hide. They will be registered with APRA and there will be transparency. I go back to that level of penalties on the banks: if their conduct falls short, there is a capacity for penalties of up to $200 million. This new regime will require a proportion of senior executives' variable remuneration—the bonuses—to be deferred for a period of at least four years, to focus any decision-making on what might be long-term outcomes. It will not be possible for somebody who knows the heat is about to be applied to them to grab their bonus and take off, because it will have to be withheld for a period of up to four years.

I turn now to credit card reforms. I think it is fair to say in this community that credit cards, in many ways, are a scourge. I go back, if I may, to the early 1970s. Some of us in this room will remember when Bankcard first came in. It was widely circulated. There were people who had died who got Bankcards; there were children who got Bankcards. My father, not long before he died, was a bank manager. He had come from very humble circumstances—he lived in Fremantle and got a job on the wharf when he could during the Depression, and eventually he got a job in the banking world. He said to me one day: 'Chris, credit cards will be the absolute death of many families in Australia.' I said to him, 'Why?'

He said: 'You have to have been abjectly poor to know how badly you want what someone else has got but you can't have. But what this jolly Bankcard is going to do is that it is going to make people think they can afford what they can't have. They will buy it, and they will be forever in financial stress.' He said, 'It's going to lead to domestic violence.' He said: 'It's going to lead to marital break-up. It's going to lead to all of those arguments within families as the Bankcard bills come in and can't be met, with the levels of interest that are charged.' My father died in 1974, and I often reflect on his words when I see the stress that is on households now as a result of massive credit card debts and when I hear the stories of people in all socioeconomic sectors who max out—I think that is the term used—their credit cards every month. Indeed, they use another form of finance to pay the interest on credit card debt. I often reflect on how true those words that my father said to me in the early 1970s were because his warning has come home to roost.

With regard to credit card reform, the government will crack down on poor practices in the credit card market by putting into place new rules for how credit is provided and credit card interest is calculated and make it easier for consumers to cancel cards or reduce credit limits. Based on the comments I just made, my urge is surely that, before a person is given a credit card with the limits they are allowed to spend up to, there should be greater scrutiny and counselling of that person. I am including young people, but I am also including people who themselves might not have the wherewithal to be able to make those decisions for themselves, because it sounds easy, doesn't it: 'I've got a credit card. I've got $20,000 credit. I want that particular product. I'll put it on the card. I'll put it on the never-never.' And 'the never-never' is right because it never, never gets paid, and in many instances it is the cause of so much stress.

I want to go to the new bank levy. As we know, the government, subject to legislation being passed in this place, will be introducing a major bank levy for the authorised deposit-taking institutions, banks, with liabilities of at least $100 billion, and it will raise $1.5 billion per year. I make these comments, if I may, in relation to the levy. The banks, of course, have been actively lobbying against this. They have been saying, 'Well, either the costs have to be borne by consumers or they have to be borne by shareholders.' Let me remind the banks of a couple of elements going back to the global financial crisis.

Mr Wayne Swan was the Treasurer at the time. Mr Rudd was the Prime Minister. In the face of the global financial crisis, the now Prime Minister, then the Leader of the Opposition, Mr Turnbull, recommended to Mr Swan that there should be put into place a protection of deposits of consumers, customers, up to $100,000, possibly with some financial impost and penalties in place. Regrettably, despite Mr Turnbull's long experience in the banking industry, Mr Swan chose to ignore that advice. He regarded it as being ridiculous. Within days, he not only went that way but extended it beyond $100,000 of protection for depositors through to an unlimited level of protection for depositors. Of course, there was to be a financial impost on the banks in consideration of this. One bank—without using the name, I guess I could ask the question, 'Which bank?'—did not avail itself of that facility, and of course it did not incur the financial burden.

But what happened as a result of that? We had the major banks with the protection of the Australian government, the Australian taxpayer, so we saw a flow of funds, as I understand it, from smaller lenders, from smaller home mortgage operators, into the major banks. An enormous amount of money, an enormous amount of deposits and an enormous number of home mortgages transferred into the big banks, and they enjoyed the benefit of that at the expense of other, smaller lenders in the banking world. Of course we know that, with the global financial crisis then diminishing, those mortgages remained with the big banks. So for the big banks today to be saying they are being unfairly targeted as a result of this levy is a little bit cheeky.

The second point I would like to make in relation to this is to do with the current circumstance with the cash rate. We know it sits at 1.5 per cent and has not moved now for some extended period of time, and yet what have we seen with home mortgage interest rates? They have continued to go up. The cash rate has stayed the same—that cost impost has remained the same—and interest rates have gone up. To whose benefit? Yes, it has had an impact on housing prices in Melbourne and Sydney, but I can tell you that the Australian housing market is not just Melbourne and Sydney; the rest of Australia exists also. But I can also say to you that that surplus profit occasioned by the fact that home mortgage interest rates have gone up but the cash rate has remained the same has gone straight into the pockets of those four major banks. If they now are in a position to be able to make a contribution to assist in reducing the debt and the deficit, which we know are unacceptably high as a result of what we inherited from the last government, then it is up to the banks to be part of that process.

The question has been asked: why should other, international banks not participate in the scheme? The answers, I suspect, are obvious from the comments I have made. First of all, they were not the lucky recipients of the umbrella of protection back in the global financial crisis. Secondly, they are not major participants in the home mortgage interest program. But of course, should any of those banks get to the stage where their authorised deposits have liabilities exceeding $100 billion, then they too would have the opportunity to assist the rest of the Australian community in the budget by raising that $1½ billion a year. The level is very low. It is 0.6 of one per cent. That is the level at which it is being struck. By comparison, debt funding costs for the major banks are estimated to have fallen by 0.35 per cent in recent times. That is six times the figure that is being sought in this sector.

I conclude by saying we have a strongly regulated banking sector. We will improve the regulation; we will improve the strength, and I simply say: those are the levers that are required by this country to ensure consumers are protected and the banks meet their financial obligations.

9:53 am

Photo of Jacqui LambieJacqui Lambie (Tasmania, Independent) Share this | | Hansard source

I rise to speak on the Banking and Financial Services Commission of Inquiry Bill 2017, which was coordinated by the Greens. I agreed to co-sponsor this bill because I am sick of hearing stories from my constituents of heartbreak and financial ruin. A royal commission into the banking and financial sector has been put off and put off by the government. I think it is important to ask ourselves: why is the Liberal government opposed to taking a magnifying glass to this sector? It cannot be the cost, because the government did not think twice about spending around $46 million on the trade union royal commission, as reported by The Australian in 2015. It cannot be politics, because a poll run by think tank The Australia Institute last year found that 68 per cent of respondents supported a royal commission into the banks. Instead, the Liberal government has proposed inquiry after inquiry after inquiry, has supposedly improved the powers of ASIC and has improved access to the Financial Ombudsman Service—small, insignificant changes in the grand scheme of things, compared to the collateral damage left behind by the endless search for a greater profit.

No, the Liberal government's small changes are not adequate. Australia needs to see a cultural shift before the industry can restore its reputation. Banks are a vital part of our lives and they should view themselves that way, as a part of our community, instead of worrying only about their bottom line, their shareholders and the amount that they pay their executives.

For the crossbench, this is not about a political witch-hunt. A commission of inquiry into the banks is not about getting even for the government's trade union royal commission. That would be absolute rubbish. It is simply about rooting out any wrongdoing or unethical behaviour by lending organisations and other financial services. There have been enough scandals in recent years to warrant a commission of inquiry. My office has been flooded with complaints relating to the banks and other financial services.

When the Greens approached me to co-sponsor this bill, my response was a wholehearted yes, on the condition that the bill also take a close look at the insurance sector and payday lenders. A number of small businesses were absolutely devastated by the Tasmanian floods last year, and many of them struggled with their insurance claims. Some were misled by their insurance company or their insurance broker. Others had their first claim rejected. These businesses, who had lost hundreds of thousands of dollars in stock, building damage, vehicles and more, had to fight for months to get what was owed to them. We fork out tens of thousands of dollars for insurance to guarantee that, when the unthinkable happens, we can tap back into that investment to save ourselves from going under. So it is particular horrendous when insurance companies or their brokers compound that tragedy and disaster, making people's lives absolutely miserable and forcing them into the ground further during a time when insurance is supposed to ease the pain and suffering.

Payday lenders acting as predators—and I am putting it politely—are taking advantage of everyday Australians, pushing them into loans they cannot afford, and they know it, just as I do, yet they are still getting away with it. I have spoken to people who were hounded into taking out a loan with payday lenders, glossing over the requirements and resulting in my constituents and many other Australians drowning in debt. The commission of inquiry is exactly what these sectors need to clean house and have a fresh start.

Ultimately this comes down to leadership. If our banks and financial sector had absolutely nothing to hide, they would be leading the way to a royal commission or a commission of inquiry. A business with nothing to hide would have thrown open its doors and welcomed the opportunity to brag about a bill of clean health to prove its community-mindedness. But, more than for the banks, this was an opportunity for the Liberal government to show leadership. Instead, they have skirted around the issue, with one toothless inquiry after another after another, and they are still doing it.

There is a clear imbalance of power here, and the banks' 'too big to fail' attitude needs to be reined in. They are not untouchable. We are in this place today to even the playing field, to restore the balance of power and to restore public confidence in our banking and financial sectors in this country. I will tell you what: it is a long time overdue.

9:58 am

Photo of Sam DastyariSam Dastyari (NSW, Australian Labor Party) Share this | | Hansard source

My apologies; I was enthralled by the comments that were made by Senator Lambie, and I did not realise she was just coming to an end. I want to begin by touching more broadly on the context of why the Banking and Financial Services Commission of Inquiry Bill 2017 has come about, and I want to begin by congratulating Senator Whish-Wilson. I think this is a very fine bill. I think the intention of this bill is very good. I believe it is unfortunate that this bill is needed at all.

There is no point in pussyfooting around this: this is a second-best option to the option that I think a lot of us in this chamber would prefer and on which I believe the chamber has expressed its will, and that is a royal commission. What Senator Whish-Wilson has tried to do is say: considering that the government has made a clear decision and that royal commissions are a matter for the government, what is the next-best option that would be available to those who want to pursue a royal commission? I think, unfortunately, it is always a misfit to try to create a piece of legislation to achieve what a royal commission would otherwise be able to achieve. That being said, I believe that Senator Whish-Wilson has certainly done his best in this bill to achieve that. I believe it is a good bill. I believe it is a bill that is worthy of support, but I do believe it demonstrates the limitations on what is available to us when we do not have a government that will support a royal commission into Australian banking.

What we have really seen is a government that has floundered on this issue, that has danced around this issue and that is trying to pick and choose parts of the issue. But the reality is we need a royal commission into Australian banking. We need to have the powers of a royal commission. We need to have the scope of a royal commission. What Senator Whish-Wilson has put together here is essentially a legislative fix to try and achieve those types of powers in the context of a government that does not want to have a royal commission.

A royal commission is the only way to get to the bottom of the rip-offs, the scandals and the misconduct that we have seen in the sector over recent years. In the absence of any leadership from the government to establish one, I think this is a good bill. I believe it is a bill that should be broadly supported. But I have to say I do not believe, unfortunately, that the process we are going through here, aside from doing the important role of this chamber—which is highlighting issues—is going to be able to go anywhere when the government obviously has the majority in the other place.

In that light, I want to acknowledge the work that Senator Whish-Wilson and certainly the Senate Economics References Committee have done over a long period of time, and the work of the parliamentary joint committee between the House and the Senate on these matters, to highlight and bring out these issues. We have had the unfortunate situation where Senate and joint committees between the Senate and the House have had to be used as a vehicle to have whistleblowers be able to tell their stories and expose some of the worst behaviour and some of the worst conduct that has gone on in Australian banking. While I am a big advocate of the power of Senate committees, unfortunately their powers are limited and their ability to expose issues is limited. What we use these committees for—I think quite effectively—is to highlight issues and bring to attention issues that need further scrutiny. The reality is that what we have seen in banking is story after story and victim after victim. It is something more than just the processes that we have seen. Every time we look, we find something new. Every time we investigate a different matter, we find something new. And at the heart of it all has been a culture in Australian banking that is at odds with what the Australian public want and expect.

Senator Back made some comments earlier that I was largely supportive of. Senator Back firstly pointed out a whole series of measures the government has taken. I believe they are mostly good measures. I believe they are measures that are aimed to achieve good outcomes, but I do not believe they go anywhere near far enough on what is warranted and needed to get to the bottom of a lot of what has happened. I believe the measures from the government have been piecemeal; they have been weak and they have come kicking and screaming. While most of the measures that he has cited individually have had bipartisan and tripartisan support, some of us who have been dealing with these issues have felt they have not gone far enough into what is actually needed.

The argument that I really want to dispute is this notion that says: 'Look, with the Australian banks—that is, big private companies operating in the private sphere—frankly there really isn't a role for government. What would be the role of a royal commission, or in this case the second-best option, which would be a kind of commission of inquiry done by legislation?' The broad argument rests around this idea that somehow, because banks are businesses, they are private. I want to remind everybody that, when the banks were in trouble, the Australian public went out there and committed to securing deposits. The Australian public guaranteed the Australian banking sector. That protection the banks have been given is a difficult one to monetarily quantify, but at that time it meant a lot.

There is a social contract between Australian banking and the Australian people. We all want profitable banks. Our issue is not that the banks are profitable. I hope the Australian banking sector remains strong and profitable. We recently had another quarter of economic growth—our longest run of economic growth in history. A large part of that has been because of an efficient banking sector.

The fact that the four large banks have made somewhere around $30 billion of profit in the past couple of years consistently should not be looked upon as necessarily a bad thing. I think it is a good thing. I think their profitability is a good thing. But sometimes I think the banks and the institutions forget that there is a social contract that is part of that. To have the types of guarantees that the Australian public is prepared to give them, they have a responsibility as well. Their responsibility is to actually be there for the Australian community and to give back. Some of the cultural behaviour that we have seen has been reprehensible.

This is not a matter that has really been for one side of politics alone. I note that senators like Senator Whish-Wilson—obviously, the Greens have moved this bill—and 'Wacka' Williams from the Nats have been quite involved. I note that the One Nation party—and I think Senator Roberts is going to say a few words about this later—has been incredibly active on this issue, as well, as have many members of the Liberal Party, including Senator Fawcett. The issue around Australian banking is one where there is a large amount of agreement in this chamber—if not unanimous agreement—that there has been a problem with behaviour, a problem with culture and a problem with conduct. Where I believe the political disagreement rests is in: how is the best way of addressing that problem?

There are those on the opposite side of the chamber—and I do not want to pre-empt their arguments for them—who have made the argument outside this place many times: 'What would a royal commission achieve? What would a commission of inquiry actually achieve? We already know what the problems are. Instead of looking at exposing more problems, just try and legislate and fix the problems that we know are there.' I believe that is the wrong way of approaching this because we do not know what is there. We know what we know. We know about CommInsure. We know about NAB. We know, to differing degrees, about the bill bank swap rate. We know about some of the matters at the ANZ. We know about some of them at the NAB. We know about discrete matters. We know a lot of individual cases of people who have been taken advantage of, especially in the rural sectors. We know bits and pieces around the CBA. But the depth and the scope of it, I do not believe, can really be adequately addressed until we really get to the bottom of what has gone on and what has happened.

I did want to use this opportunity to speak on this bill today to put on the record a view that I have had for a period of time as to what would be the types of solutions that we should be looking at for these types of problems that I believe a commission of inquiry or a royal commission would really be able to look at. The one that I really want to stress is this idea of a scheme of last resort. The Senate Economics References Committee—Senator Whish-Wilson is quite familiar with this—spent quite a bit of time looking at this in different shapes and forms. It spoke to a few people about it. The idea is this: there has to be a safety net for the victims, in particular the victims of financial advice. Through no fault of their own, they have gone through a process in good faith and, at the end of it, have been left destitute.

A scheme of last resort—there are similar schemes in places like the UK. There are ways of handling these issues where you are able to adequately deal with matters that are at times legitimate, like moral hazard. You can have a prospective scheme. You can have a retrospective scheme, if you want. You can have a scheme that caps it to individuals. You can have a scheme that caps it to a certain amount. There are practical solutions that can address the horror stories of the victims. Frankly, my argument has been—and I am not saying anything in this chamber that I have not said to bank executives in the opportunities that we had through the Senate committee processes to discuss this with them: a system that leaves victims and people behind undermines the entire confidence in the system as a whole. And that is in nobody's interests. That is not in the interests of the Australian banking sector. That is not in the interests of these larger corporations and these larger banks.

I welcome this bill. I congratulate Senator Whish-Wilson for being able to get so much cross-party support for it. I think it is a fine piece of legislation. I do not believe, Senator Whish-Wilson, that this bill goes far enough. I do not believe this bill achieves what we really need, which is a royal commission. This a bill that has been created in the context where the will of this chamber, which is to have a royal commission, is not shared by the other place. As a result, this is the best thing that we can do.

10:10 am

Photo of Malcolm RobertsMalcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

As a servant to the people of Queensland and Australia, I am very, very pleased to support the Banking and Financial Services Commission of Inquiry Bill 2017 from the Greens and Senator Whish-Wilson. We have been supportive of this from the start and we commend them for raising it and for seeing it through, and we look forward to it being implemented. The banks do provide a vital service to our country and to people right across Australia—that is fundamental. But as Chair of the Select Committee on Lending to Primary Production Customers, we are now seeing the inflow of submissions from people who are being devastated by banks and who are being devastated by the unconscionable conduct of banks on some occasions. I am told, and I have not checked the figures, that this is the 18th such inquiry in recent times—possibly since the global financial crisis. That tells us that something is not being fixed and that this is endemic and systemic.

We are very dedicated to making sure that this inquiry succeeds. We are being very open. We have already listened to the banks—without formal inquiry; the banks have approached me—and we have also listened to and tried to support people who have been hurt by the banks right across Australia. Having said that and intending to do a fine job on holding the banks accountable and to inquire into primary production customers and the lending to them, we still see the need to go beyond and to support Senator Whish-Wilson's bill.

We know that the public are aware of the need for this commission of inquiry. We cannot understand why the government is so reluctant to have a royal commission. Regardless of whether this is second best or better, it does not matter because this looks to have the teeth to be able to get into it. But I would like to go back to basics for a minute. I am not a finance expert; I am, however, a graduate from the University of Chicago graduate school of business where I did an MBA. That has given me a little touch in finance. I do note that the University of Chicago is arguably the No. 1 financial university in the world. Even there they did not teach us some basic fundamentals, so let us discuss some of them—things that I only became aware of relatively recently.

Another word for money is currency. It enables flow and currency enables the exchange of goods and services in any economy. So the banking sector which influences that is very, very important to the fluid and efficient exchange of goods and services—the efficient economy. Exchange is important. Currency is important. In our society, though, in Australia, and in the major western democracies, currency is almost entirely created out of thin air. It is something that I did not know about just five or six years ago until I started reading in depth. I call upon the works of Murray Rothbard, the acclaimed Austrian School economist—a fine economist, the late Murray Rothbard. He showed how it is created out of thin air. This is very, very important to understand, because that then determines what flows from that creation out of thin air. When this is constrained, as it is in our country and in major western democracies, those who control currency creation control everything and it is that fundamental.

The Bank of England, to my knowledge, was the world's first central bank and it was created in 1694 and was a privately owned bank. In looking to create the United States constitution, the forefathers of the United States constitution looked at Europe and saw that that continent had been devastated, despite being civilised, by war after war after war. They pointed the blame at two things: central government and private central banks. They made sure in the constitution of America that there would be no dominant central government, and that is why they had a federation of sovereign independent states—the first 13 states.

They also made sure that only the congress could issue currency. Within 20 years of the formation of the United States of America, contrary to the constitution, the first privately-owned central bank was created. I think it was the first bank of America. That lasted only 20 years and the charter was not renewed, because it had been so destructive to the economy. It was not long, however, before the major international banks formed the second central bank of America, and that was ended in 1832 by a speech by Andrew Jackson—which I commend to all senators—to the American congress in which he itemised the destruction caused by the central banks—the all-powerful, privately-owned central banks. He ended that in 1832. Thereafter, the major banks, not just American but also European banks, embarked on their crusade to form the third privately-owned central bank, and that is the current United States Reserve Bank. It controls interest rates, it controls money supply and, therefore, it controls just about everything indirectly. That is very important to understand. We also see the major multinational banks such as Bank of America, Merrill Lynch and Rothschild Australia having in their clutches carbon dioxide trading—a scheme they have created to make money out of thin air. It gives them enormous power. These banks rule over so much of our lives, our economies and our nations.

So I checked this bill to make sure that the terms of reference would encompass the creation of currency and the behaviour of the central bank and also the behaviour of the major banks. I commend Senator Whish-Wilson for making sure that the terms of reference were sufficiently broad to capture all entities in the financial services sector. The banks, as Senator Dastyari said, seem to be a law unto themselves. We note that in the global financial crisis the banks actually socialised the losses, yet they retained the profits. In times of profit, profits are privatised; in times of losses, losses tend to be socialised, because the banks are too big to fail. We see journalists in our society like Robert Gottliebsen and Terry McCrann being outspoken in highlighting some of the things that the banks are doing that are at times destroying our economy or limiting our economic efficiency. Robert Gottliebsen recently wrote a series of articles in which he said that the banks are a law unto themselves—and that must end.

I make further reference to the terms of reference in Senator Whish-Wilson's bill that ensure the systems that drive behaviour are understood and investigated, because systems drive behaviour and behaviour shapes attitude. The combination of behaviour and attitude is culture, and that goes to the heart of any industry or sector. I again commend Senator Whish-Wilson for recognising this fact and the need to investigate the culture of Australia's financial system and the culture of Australia's banking system.

Finally, as chair of the Senate select committee into lending to primary production customers, I want to reassure people across Australia, especially in the rural sector—farming, fishing and forestry—that we are onto their plight at the moment. We are doing everything in our power to do a thorough job of investigating that, inquiring into it and making clear recommendations to the government. We are also turning our attention to supporting Senator Whish-Wilson's commission. In the meantime, we urge all senators to vote in favour of this bill.

10:19 am

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

I move:

That the question be now put.

Photo of Dean SmithDean Smith (WA, Liberal Party) Share this | | Hansard source

Mr Acting Deputy President, I raise a point of order. Is Senator Siewert denying me my opportunity to make a contribution to this debate now?

Photo of David LeyonhjelmDavid Leyonhjelm (NSW, Liberal Democratic Party) Share this | | Hansard source

I think that is what is occurring, yes.

Photo of Stephen ParryStephen Parry (President) Share this | | Hansard source

The question is that the question be now put.

The question now is that the bill be read a second time.

Question agreed to.

Bill read a second time.